In 2014, Huawei set the following goals for supply chain sustainability: satisfying customer requirements, exceeding customer expectations, making continuous improvements, driving business success, and striving to set the industry benchmark.

Alongside these goals, they devised the following strategies: systematic risk prevention, proactive management, efficient internal/external collaboration (customers, suppliers, and industry partners), and continuous improvement. Thry also incorporated sustainability requirements into our end-to-end procurement process, including supplier qualification, selection, assessment, performance management, procurement fulfillment, and supplier exit.

They recognize that passive sustainability is a cost while active sustainability is a profit. Raising their levels of sustainability requires them to collaborate with customers, suppliers, and the entire value chain. Together they can construct efficient models of sustainability management, and thus achieve our goals. In 2014, Huawei's supply chain management efforts focused on the following areas:

▪ Working with customers to fully understand their requirements and expectations for sustainability, and incorporating these elements into Huawei's procurement, supply chain management, and supplier lifecycle management processes.

▪ Working with suppliers to clearly convey customer requirements to suppliers and make them part of Huawei's suppliers' business processes and daily operations.

▪ Strengthening Huawei's assessments on supplier sustainability, and urging suppliers to make continuous improvements and convey sustainability requirements to their vendors until they are adopted across the entire value chain.

▪ Working with suppliers to jointly improve Huawei's processes for the benefit of end users and the public. Incorporating Huawei's sustainability standards and requirements into joint processes and IT systems to maximize efficiency.

▪ Joining industry organizations and engaging in industry-wide collaborations and dialogues with suppliers to jointly explore sustainability requirements and standards, and thereby improving sustainability management across the industry.

▪ Working with Huawei's engineers to ensure their products are designed for the circular economy.

Supplier Sustainability Agreements
Based on the Electronic Industry Code of Conduct (EICC), Huawei has developed its Supplier Sustainability Agreement. Huawei requires every supplier to sign the Supplier Sustainability Agreement as a key step in supplier qualification. The compliance level with the agreement is one of the key factors that Huawei considers during supplier audits and performance appraisals.

Supplier Performance Management
Huawei appraises suppliers' sustainability performance annually based on onsite audit results and improvement outcomes. Performance appraisals cover a total of 15 indicators, including redline management requirements and key factors such as labor, health and safety, environment, business ethics, and management systems. Suppliers are classified into four grades (A, B, C, and D) based on their sustainability performance, which represent their performance level in descending order.

Global Supplier Sustainability Conference
Supply chain sustainability lies in the shared awareness and collective action of all players in the supply chain. Communication and information sharing between different companies helps the entire community reach a consensus and achieve synergies. The Global Supplier Sustainability Conference is a key opportunity for Huawei, its suppliers, and all other stakeholders to talk with and learn from each other. It is greatly appreciated by all attendees. The Global Supplier Sustainability Conference and Regional Supplier Conferences have been held every year since 2009. At the conferences, we invite our senior executives to introduce Huawei's sustainability strategy and requirements. Our key customers are invited to explain sustainability trends and their own demands directly to our suppliers. Industry experts, municipal government speakers, and NGOs are invited to discuss industry trends and business opportunities, and suppliers also share their success stories. Additionally, suppliers learn about global trends and customer needs, increase their expertise, and set the direction for their own sustainability efforts. In September 2014, Huawei hosted the Sixth Global Supplier Sustainability Conference in Shenzhen under the theme of "Building a Connected World – a Greener Supply Chain and Greater Competitiveness". The event attracted 220 attendees, including representatives from customers, suppliers, government agencies, and NGOs. Huawei Rotating CEO Eric Xu addressed the conference, calling for deeper collaboration with suppliers to discover opportunities for innovation, develop new products, enter new markets, explore new business models, and improve business efficiency. In collaboration with suppliers and other key stakeholders, Huawei strives to drive sustainability across the industry chain.